Report on the Medicare Drug Discount Card Program Sponsor Computer Sciences Corporation

EXECUTIVE SUMMARY:

The objectives of our review were to determine whether Computer Sciences Corporation (CSC) complied with Federal requirements to ensure that beneficiaries did not exceed their transitional assistance (TA) limits, apply TA funds only to covered drugs, pass on negotiated prices to beneficiaries and offer the lower of the negotiated prices or the usual and customary prices, and support the expenditures and withdrawals it reported to CMS. CSC properly passed on the lower of the negotiated prices or the usual and customary prices to the beneficiaries. However, CSC did not have proper procedures in place to ensure that it always complied with Federal requirements to ensure that beneficiaries did not exceed their TA fund limits, apply TA funds only to covered drugs, pass on to beneficiaries the proper amount of rebate included in the negotiated prices, and properly support the expenditures it made on behalf of beneficiaries. As a result, CMS overpaid CSC $450,519 for beneficiaries who exceeded their TA limits and $156,305 for excluded drugs for the period July 12, 2004, through July 31, 2005. CSC reimbursed CMS $203,577 for excluded drugs. Also, CSC reported on its Transitional Assistance Monthly Expense and Reconciliation Reports (TAMERs) $918,339 more than the beneficiary claims totaled. During our audit, CSC corrected the errors it made and reimbursed CMS for the inappropriate expenditures it recorded on its TAMERs. In its written comments on our draft report, CSC agreed with all of the findings and stated that it will reimburse the amount it still owes for excluded drugs, but was requesting a waiver from CMS on the amount it paid for exceeding the TA fund limits because the beneficiaries benefited from the overpayments.